This paper examines how frictions in the market for land hinders the growth of manufacturing firms in developing economies. Using unique manufacturing census data from India, I document how firms acquire many small parcels of land over time. I call this the small land bite strategy. Land market frictions are the result of increased land fragmentation, poor land records and restrictive land use policies. I estimate a model of dynamic land acquisition where land adjustment costs vary spatially, by ownership and on the size of adjustment. I find private establishments pay substantially more for land aggregation than government-affiliated firms. I use the model to calculate the lost producer profits due to land frictions and analyze the effects of proposed government land pooling policies on firm growth and land misallocation.
{"title":"Land Market Frictions and Manufacturing in India","authors":"A. Sood","doi":"10.2139/ssrn.3468519","DOIUrl":"https://doi.org/10.2139/ssrn.3468519","url":null,"abstract":"This paper examines how frictions in the market for land hinders the growth of manufacturing firms in developing economies. Using unique manufacturing census data from India, I document how firms acquire many small parcels of land over time. I call this the small land bite strategy. Land market frictions are the result of increased land fragmentation, poor land records and restrictive land use policies. I estimate a model of dynamic land acquisition where land adjustment costs vary spatially, by ownership and on the size of adjustment. I find private establishments pay substantially more for land aggregation than government-affiliated firms. I use the model to calculate the lost producer profits due to land frictions and analyze the effects of proposed government land pooling policies on firm growth and land misallocation.","PeriodicalId":336365,"journal":{"name":"GeographyRN: Industrial Geography (Sub-Topic)","volume":"77 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-10-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128398543","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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